Once in a while you come across a delicious new recipe. You know the moment that succulent bite passes your lips that this is something so far from ordinary; you’ll remember this meal for years to come. Growing up in Alabama, I had a number of these culinary nirvana moments. There is something poetic about the marriage of stifling humidity and its effects on the stomach, and all good Southern cooks know how to satisfy hunger with a complex blend of secret ingredients. Now, slide back from the figurative table to which I’ve just invited you, and imagine that this secret sauce metaphor applies to other aspects of life. Some clever Alabamians cooked up a new kind of secret sauce in the form of health care coverage.
Simpra Advantage (Simpra) is part of a growing trend toward Medicare Advantage managed care plans. Managed care is a type of health insurance in which the insurer contracts with certain medical providers and facilities to offer services to plan members at a reduced cost, with the trade-off that patients receive care only from contracted providers. Simpra, a Special Needs Plan (SNP), is open to Alabama nursing home residents. Under Medicare Advantage SNPs, private insurance providers offer standard Medicare services as well as other customized benefits to a specific group of beneficiaries, including those with certain chronic conditions, those who qualify for both Medicare and Medicaid, and those who live in an institutional setting such as a nursing facility.
Simpra targets both older adults who reside in long-term care facilities and younger long-term care facility residents who qualify for both Medicare and Medicaid. Customized benefits for Simpra-enrolled residents include care coordination across providers through a dedicated, in-facility nurse practitioner (NP) and access to services that may be hard to obtain through traditional fee-for-service Medicare plans (for example, foot care, hearing aids, and eye exams). Likewise, participating facilities benefit from access to the on-site Simpra NP.
Medicare Advantage SNPs are not new; what sets Simpra apart is the ownership structure. SeniorSelect Partners, LLC, the parent company that owns Simpra, is a conglomerate of 23 nursing home companies in Alabama, representing more than a 50 percent market share of all nursing facilities in the state. In short, a group of nursing facility corporations have united to create and market their own insurance plan to residents of their own facilities. Although a few other health systems around the country have developed their own insurance products, Simpra Advantage is unique in its inclusion of competing nursing home brands in Alabama.
Opportunity is the driving force behind this sudden burst of cooperation among competitor nursing home companies. Until recently, Medicare Advantage plans had low market penetration in Alabama and, while critics say that these plans limit provider choice and regulate access, they can provide high quality services at a lower cost. National Medicare Advantage plans, such as United Health’s Optum, treated the lack of Alabama market penetration as a huge opportunity, with steady statewide growth in recent years. Consequently, SeniorSelect Partners, LLC, is taking advantage of this industry opportunity from within the state.
Simpra’s within-state model has three business advantages over national competitors. First, they have local knowledge. Let’s imagine that a given resident, Ms. Gray, has a number of chronic conditions that create greater risk of needing costly care. In contrast, Mr. Gold might be low risk, with few care needs or associated expenses. Simpra can leverage their direct knowledge of Ms. Gray’s and Mr. Gold’s medical histories to target enrollment to residents like Mr. Gold. Since insurance plans work to provide coverage while mitigating risk, Simpra gets a leg up on national managed care plans by using this boots-on-the-ground knowledge and existing relationships to predict which enrollees will be most beneficial to their bottom line. Second, Simpra’s in-person contact with residents and families simplifies their marketing efforts; prospective beneficiaries may be much more likely to enroll in a plan that is affiliated with the nursing facility where the beneficiary is already living. Third, Simpra leadership wants to succeed. Those 23 participating nursing home companies have not one, but two opportunities to profit from any given resident: once on the occupied facility bed and again on participation in the Simpra plan.
Of course, these business advantages may be ethically murky. Depending on your perspective, Simpra hits the perfect balance: a boon to older adults, providing access to needed additional services at potentially lower costs, and an innovative way of ensuring financial security for nursing facilities across the state. Alternatively, Simpra may leave a sour aftertaste: a means of cherry-picking beneficiaries, leaving the highest-need seniors to standard Medicare without access to additional services, and allowing companies to cash-in twice on the same population of residents.
It’s too soon to know exactly what Simpra will mean for Alabama, as the plan has been operating for less than a year. In the meantime, we’re going to keep watching Simpra simmer before venturing into the figurative kitchen, spoons at the ready.